Weekly Series: mREIT And BDC Recommendations (And Price Targets) As Of 4/13/2025
We aim to retain the same layout from week to week. I hope that makes it easier to find the parts that are most relevant to you.
Weekly Notes From Colorado Wealth Management Fund
Positions: 0 trades
Commentary: Zero trades sounds pretty inactive, but I had lowball orders that didn't execute. They would’ve only been a small percentage of my portfolio. I moved some cash out of the Treasury bill ETFs to free it up for trading. When the limit orders didn’t execute, I moved it back to Treasury bill ETFs like SHV / BIL / SGOV just before the weekend. No sense missing out on that interest income.
Note: I count those Treasury bill ETFs as “cash” in all my calculations. They offer me a superior return than just holding regular cash. Since I count them as "cash", moving in and out of them doesn't count as a trade.
I moved $34k into my taxable account (from business checking) last week. My business checking is with Schwab and the account is allowed to hold Treasury bill ETFs. That’s a nice feature for storing excess cash. In Q1 2025, I added less than $10k of contributions ($7.75k to be precise) to my investment accounts. All the exact figures are always available in the Google Sheets on the tab called “Returns Chart”. However, I don’t list the split in cash between accounts. With the pressure on the economy, we have more opportunities to hunt for bargains. I like to put my equity REITs in the taxable account, so I wanted some extra cash there. We have a ton of cash in the portfolio already, but the vast majority is in the tax-advantaged accounts. I use those accounts to trade more actively, so they typically have preferred shares, mortgage, REITs, and BDCs.
The latest tariff announcement was tech items like phones and computers would be exempted from the tariffs. That’s interesting because those are some of the most valuable things we import. This looks like a favor to a few specific companies. Did we want to move high-tech manufacturing to the United States, or did we want to manufacture stuff like shoes? This announcement will probably be positive for the markets (because the tech companies are a large part of the total market cap), but who knows what else may have been announced or will be announced at any point over the next week.
Don’t be surprised if my trading activity picks up.
Scott’s ultra brief summary
“As already discussed in several chat notes during the week, all mREIT BVs modestly - notably decreased this past week. Spreads "across the board" continued to increase. All BDC NAVs also continued to modestly decrease this week as middle market/high-yield spreads continued to move net higher. A few specific BDCs likely experienced slightly more severe declines versus other peers (depending on specific underlying investment portfolio concentration). Similar to last week, I decided there would be no percentage recommendation range downgrades in either sector yet (as I was already projecting a mild recession in 2025 - 2026). I want to see if there's any more updates this week on the tariff/trade war front. Almost a certainty there will be. However, if there's no material updates (or say there's further retaliations), then the odds of a deeper/more severe recession move higher. If odds of a notable recession materially increase from here, I will eventually need to update my "base case" modeling. This would lead to future recommendation range downgrades in my covered sectors (agency mREIT sub-sector would likely be excluded though). However, last week's updates to tariff/trade policy were net positive in my opinion (not "best case" but far from "worst-case"). I continue to believe just having the possibility of negotiations is positive. Hope you're having a good weekend.”
Weekly Notes From Scott Kennedy
Positions: 7 trades this past week.
